If you are beginning to think about your estate planning goals, you may be weighing the benefits of having a will, a trust or both.
There are similarities and differences to consider and the decision you make could depend on how much control you want over your assets.
A will and a trust are similar in that they are legal documents that set forth your instructions as to the way you want your assets distributed to your beneficiaries. An executor or personal representative will administer the will while a trustee carries out the directives in a trust.
A will goes through probate, which is a public process. Many people prefer having a trust since this is a private estate planning tool that avoids probate. You may want to establish a trust for a specific purpose, such as ensuring that a disabled loved one will continue to receive sufficient financial help. On the other hand, you can use a will to name a guardian for a minor child in the event that you and the other parent unexpectedly die.
Revocable versus irrevocable
If you decide to establish a trust, the matter of control becomes relevant. With a revocable trust, you can revoke the terms and rewrite them whenever you like. This kind of trust can also serve as a substitute for a will. An irrevocable trust, which cannot be changed, is more often the choice for people who are looking for tax advantages or who wish to protect their assets from professional liability.
In the end, there are advantages and disadvantages to these estate planning tools. Learning more about the differences between wills and trusts will help you make the right decision based on the level of control you have in mind.